Los Angeles daily herald., 1887-07-28
THE CENTRAL PACIFIC.
Cohen Examined by the
Railroad Commission.
SPEAKING OF IT'S DEBTS
He Says That the Road Cannot
Pay the B0ndhOlders and the
Government as Well.

Associated Press Dispatches to the HERALD.
SAN FRANCISCO, July Pr. A. Co
hen, one of the attorneys for the South
ern Pacific, was examined by the Pacific
Railway Commission to-day. In an
swer 70 the question what was the
general 0, ject of the suit brought by
San Joaquin county, witness said that
the county bought stock in the West
ern Development Company and issued
bonds in payment. The act authoriz-
ing that subscription provides that the
sale should not be ratified unless by a
vote of the people. The Supervisoria1
Board sold the stock without that con-
sent to Charles Mclaughlin, who sold
it to the Western Pacific or somebody
connected with it. No payment was
received by the county from McLaugh-
lin. Suit was brought when the West
ern Pacific was consolidated with the
Central Pacific. Then, when the Central
Pacific was consolidated with the
California and Oregon road, San
joaquin road and San Francisco and
and Alameda road, San joaquin
county concluded it had a right to it's
stock and brought this suit. The re-
suit was a compromise in 1877 or
1878.
Mr.. Cohen stated that he was one
OF the attorneys for Robinson and
other stockholders against the Central
Pacific for the accounting of the funds
of the company, before his connection
with the railroad company. The suit
was brought in 1876, and it was also
compromised. He could not state ac-
curately the points in litigation and
did not know where the dispositions
could be found.
Questioned as to the contract be-
tween the Central Pacific and the
Finance Company, witness could not
state its terms, and had never seen
the contract Witness was questioned
concerning the absorption of other
roads by the Central Pacific and re-
peated the testimony given by other
witnesses.
Commissioner Anderson: "Do you
see any reason why the Central Pacific
should not be able to liquidate the
debt which it now owes the govern
ment ?"
Cohen: Eyes, sir"
Anderson 1--WE would like to
hear it,"
Cohen-"In the first place, after the
Government gave the company aid to
build its road, it afterward gave simi-
lar aid to other companies and sub
sidized other roads that have de ractcd
from the value of the Central Pacific
stock The company has been forced
by these competitions to reduce its
iare, etc., so that there is little profit
fin running the road. Besides, the
United States bonds realized the COM
pany very little, not more than 60 per
cent. of the face value. The conse-
quence is that the company now has to
pay about II per cent. for the aid it.
received then. 1t cost three times as
much to build the road as it would
have five years previously or subse-
quently. In my opinion, nobody can
take hold of the Central Pacific and
make it pay the principal and interest
it owes to the Government, and its
mortgages. Witness declared that by
reason OF the competing lines, includ-
ing the Canadian Pacific, the company
had lost $50, 900, 900 of net revenue in
the last five years. He declared that
the Thurman Act had been the most
disadvantageous act of all the Con-
gressional legislation, to prevent the
payment of the Government debt.
Commissioner Pattison reminded
the witness that more dividends had
been declared after the passage of the
Thurman Act than prior to it, and he
was asked to explain that fact.
Cohen-More actual dividends and
larger amounts were declared after
than before, but l can't go behind the
Board of Directors. They may
have issued those dividends
preparatory to selling more stock.
1t is my opinion that the company
has not made as much money since
the passage of the Thurman act in
1878.
William III. Mills, general land
agent of the Southern Pacific, said that
there were ,660,0 acres Of land ON
the books OF the Central Pacific and
1850 900 on the California and Ore
gon; 345 900 acres had been sold from
the Central Pacific and 275, 900 acres
from the California and Oregon, or
about 600 900 acres in all.